RIL, Jio Financial shares open higher ahead of AGM; here’s what to expect

Billionaire Mukesh Ambani-led Reliance Industries (RIL), the country’s most valued firm, and its recently demerged entity, Jio Financial Services (JFSL), remain in focus ahead of the Annual General Meeting (AGM) slated today. Shares of RIL and JFSL opened higher amid hopes that the oil-to-telecom conglomerate will announce some major decisions on potential listing of telecom and retail businesses, and updates on green energy and oil-to-chemical (O2C) segments. This will be the first AGM of RIL after the listing of JFSL and investors are eagerly awaiting management commentary on road map for future growth plans and areas it wants to explore as a non-banking financial company.

According to analyst at JM Financial, key expectations from RIL’s AGM are around any update on potential timeline for listing of retail and digital businesses; any potential strategic stake sale in O2C business; update on progress of various projects underway in clean energy business with timelines around project commissioning and potential earning potential from this projects. Investors also expect management to update on the launch of an affordable 5G smartphone along with attractive 5G tariff plans as well as further update around succession plans.

JM Financial has reiterated ‘BUY’ call on RIL with a target price of ₹2,900 per share, saying that net debt concerns are overdone, and also because RIL has industry leading capabilities across businesses to drive robust 14-15% EPS CAGR over the next 3-5 years.

Ahead of AGM, RIL shares opened marginally higher at ₹2,474 against the previous closing price of ₹2,469.95 on the BSE. In the early trade so far, the share price of the most valued firm rose as much as 0.3% to ₹2,477.75, while the market capitalisation stood at ₹16.73 lakh crore.

Meanwhile, JFSL shares opened higher, snapping five sessions losing streak, and gained as much as 2.6% to ₹217.70 after opening higher at ₹216 against Friday’s closing level of ₹212.25 on the BSE. The stock touched its lower circuit limits in the last four out of five sessions amid sustained selling by institutional investors. At the current price level, the stock trades 22% lower than its record high level of ₹278.20 touched on its listing day, while it is down 17% from its discovered price of ₹261.8.

Apart from this, JFSL removal from all the S&P BSE indices, including Sensex, Sensex 50, BSE 100, BSE 500 among others, have been deferred by three days to September 1. Initially, the NBFC stock was proposed to be removed from key indices on August 24, three days (T+3) after its listing on August 21, but it was postponed by three days to August 29 as the stock hit its lower circuit limit for two straight days of the three-day period.

Further, if Jio Financial shares continue to hit lower circuits in the next 2 days, the exclusion date would be deferred by another 3 days. Adding to it, if JFSL shares do not hit the lower circuit limit on either of the next two days, but hit the circuit limit on the 3rd day, the removal of the stock from all the S&P BSE Indices will be deferred by another 3 days.

In its annual report for FY23, Reliance had reiterated its capex commitment of $10 billion over 3 years in the new energy business, and its readiness to double its investment, to achieve net carbon zero target by 2035. The conglomerate had also restated the business roadmap and reported rapid progress in the setting up of the 5 Giga factories.

In regards to the O2C business, it highlighted that global petchem margins weakened during FY23 amidst lower demand from China while refining margin was strong due to rebound in global demand for transportation fuels aided by supply side concerns.

As far as its Digital business is concerned, it reiterated the target for a pan-India 5G rollout by Dec’23, make India 2G-mukt by enabling existing 250mn 2G feature phone users to transition to 4G and connecting 50mn MSME businesses through its Enterprise connectivity solutions; however, it has doubled its target of connecting homes from 50mn earlier to 100mn.

Besides, it invested ₹51,400 crore in FY23 in the retail business for aggressive store and warehouse expansion, growing its consumer brands and strengthening its digital and new commerce capabilities through organic growth, acquisitions & strategic partnerships. 

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